Cedar Haven Acquisition, LLC, operator of Cedar Haven, the former county home it purchased in Lebanon County in 2014, has received bankruptcy court approval of a plan of reorganization that paves the way for the continued uninterrupted operation of the facility while making payments to its creditors.
In 2013, with the retirement home losing an estimated $1.5 million a year due to rising retirement costs and declining Medicaid reimbursements, county commissioners voted 2-1 to sell the facility to Complete HealthCare Resources (“CHR”) based in Montgomery County.
After some confusion over the identity and relationship of potential buyers and new operators, as reported in 2018 by Lebanon Daily News, Cedar Haven Acquisition, LLC. (“CHALLC”), became the purchaser of the establishment’s non-real estate assets.
While CHALLC operated Cedar Haven and owned its equipment and non-real estate assets since their purchase from the county, the building and lands along S. 5th Avenue are owned by a separate company, 590 S. 5th Avenue LLC. CHALLC leased the property at 590 S. 5th Avenue, LLC.
CHALLC filed for Chapter 11 bankruptcy in Delaware on August 2, 2019, citing millions owed to more than 200 creditors.
Chapter 11 bankruptcies allow a business to continue operating while it develops a plan to repay creditors, in whole or in part, over time.
CHALLC has continuously operated Cedar Haven since its bankruptcy filing, and initial fears that it would close, putting elderly and disabled residents on the streets, proved unfounded.
Since filing for bankruptcy, CHALLC had tried unsuccessfully to find a buyer for the company.
CHALLC’s Chapter 11 reorganization plan was approved on July 28 by U.S. Bankruptcy Judge J. Kate Stickles. CHALLC says the plan will ensure the continued operation of Cedar Haven and the continued care of its residents,
Additionally, the plan, if successful, will build a reserve of money to pay “unsecured creditors” at least some of what is owed to them.
Unlike “secured creditors”, who can be paid from the assets of a bankrupt business because they have liens, judgments or mortgages, unsecured creditors – such as contractors, vendors, customers and credit card providers – are the last in line and have no assurance that they will receive a penny from a bankruptcy.
CHALLC told the bankruptcy court there were approximately $12,300,000 in unsecured debt. Under the plan, the pool to pay unsecured creditors will be $2,000,000, to be funded quarterly by CHALLC from excess cash it may earn after paying secured creditors.
CHALLC receives most of its income from Medicaid, Medicare, and insurance payments on behalf of Cedar Haven residents.
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